JOHANNESBURG, July 10 (Reuters) – The rand weakened against
the dollar early on Tuesday, pressured by a bleak global growth
outlook after soft Chinese data, while bonds firmed slightly as
investors awaited the results of a weekly debt auction likely to
be dominated by offshore buying.
The rand was weighed down by weak Chinese June import data
which showed imports grew at half the expected pace – a slowdown
that is likely to cause a deterioration in South Africa’s
current account deficit as exports slow.
Over 35 percent of South Africa’s exports go to Asia,
against 25 percent to the euro zone.
The weak Chinese data signals a bigger gap in South Africa’s
trade account, which drove the current account to its worst
level in over three years in the first quarter.
The rand weakened 0.3 percent to 8.2414/dollar at
0644 GMT but was within Monday’s trading range and firmer than
the previous session’s low of 8.30.
“The Chinese data is impacting general risk appetite, but
also more acutely South African assets due to the trade ties,”
said Christopher Shiells, emerging market analyst at Informa
Global Markets.
Yields on government bonds nudged lower to 5.94 percent on
the 2015 and 7.865 percent on the 2026 issue
.
The Treasury is looking to sell 800 million rand of its 2031
bond, 800 million rand of the 2023 and 500
million rand of the 2018 at a weekly auction.
Offshore investors, who bought over 20 billion rand of local
debt last month and drove yields to record lows, are expected to
pick up the most stock.
Continued…
